When a Firm's Long-Run Average Total Cost Falls as Its

question 117

Multiple Choice

When a firm's long-run average total cost falls as its output increases,the firm is experiencing

• A) economies of scale.
• B) diseconomies of scale.
• C) constant returns to scale.
• D) decreasing marginal returns.
• E) decreasing cost of marginal returns.

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Definitions:

Monopolistic Competition

A market structure characterized by many firms selling similar but not identical products, with each having some control over its own prices.

Price Makers

Entities in a market that have the power to set prices for goods or services because they hold significant control over the market or the product.

Oligopoly

A market structure in which a small number of firms dominate the market, leading to limited competition and possibly higher prices for consumers.

Market Power

The ability of a firm or group of firms to influence or control prices and total market output.